India–Mexico tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.	There is no shareholding threshold, no second tier and no holding period. Art. 10(2): 'However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident…	Article 10, paragraph 2
Interest	10 per cent of the gross amount of the interest — Art. 11(2), a single flat ceiling, conditional on the beneficial owner of the interest being a resident of the other Contracting State. There is no lower tier for bank lending.	The exemptions sit in the article itself, at art. 11(3), not in the protocol. The chapeau: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in…	Article 11, paragraph 2 and 3
Royalties	10 per cent of the gross amount — Art. 12(2). Royalties and fees for technical services share one article and one rate, with no split, no lower tier for equipment royalties or copyright and no separate FTS rate. Conditional on the beneficial owner being a resident of the other Contracting State.	Art. 12(3)(a) is the standard wide definition — copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, patent, trade mark…	Article 12, paragraph 2
Fees for technical services	10 per cent of the gross amount — the same rate as royalties, under the same Art. 12(2).	There is an FTS limb and IT has no make-available requirement. Art. 12(3)(b): 'The term fees for technical services as used in this Article means payments of any kind, other than those mentioned in articles 14…	Article 12, paragraph 2 and 3(b)

Status

In force	1 february 2010 — the Introduction states that 'the date of entry into force of the said Agreement is the 1st day of February, 2010, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Agreement, in accordance with paragraph 2 of Article 30'. Signed at new delhi on 10 september 2007 — the Agreement and the protocol together — 'each in the Hindi, Spanish and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.' Note the two-and-a-half-year gap between signature and entry into force. Effect: Art. 30(3)(a) gives effect in India in respect of taxes withheld at source for amounts paid or credited on or after 1 april of the calendar year next following the year of entry into force, and in respect of taxes on income for any fiscal year beginning on or after that same 1 April — and the notification directs that the provisions be given effect 'with effect from 1ST day of april, 2011'. So FY 2011-12 onwards in India, for both withholding and assessment.
Given effect by	Notification no. 86/2010 [F. No. 503/4/91-ftd-I], dated 26-11-2010 — issued under s.90 of the Income-tax Act 1961, directing that all the provisions of the Agreement and the protocol, as set out in the Annexure, be given effect to in the Union of India with effect from 1 April 2011. The notification expressly covers the Protocol, which therefore needs no separate instrument. The Agreement covers taxes on income only; there is no capital article. Note the file number dates from 1991, indicating a very long negotiation.
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	No MLI principal purposes test — no Synthesised Text for Mexico has been identified from the sources used here. But there is A bilateral main-purpose test, and IT is drafted to override the whole of the objective LOB. Art. 28(6): 'notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this agreement, if its affairs were arranged in such A manner as if IT was the main purpose or one of the main purposes to avoid taxes to which this agreement applies.' Three features distinguish it from the MLI PPT. First, it applies to 'any person', including an individual — whereas Art. 28(1) is confined to persons other than individuals. Second, it has no object-and-purpose escape: the MLI PPT allows the benefit where granting it would accord with the object and purpose of the relevant provisions; Art. 28(6) contains no such proviso and is therefore harsher than the PPT. Third, the purpose tested is 'to avoid taxes to which this agreement applies' — a tax-avoidance purpose — rather than the PPT's 'obtaining that benefit'; the formulations are close but not identical. And note the interaction with para 4: para 4 requires consultation before denial 'by reason of paragraph 1, 2 or 3' — it does not mention paragraph 6. On a literal reading, denial under the main-purpose test in para 6 does not attract the mandatory consultation requirement. Which paragraphs of an existing anti-abuse article did A PPT replace? None — no MLI PPT has been introduced into this treaty on the face of the record, so all six paragraphs of Article 28 stand. That is the same position as Kenya: the bare bilateral tests survive intact precisely because nothing has replaced them.

Dividends

Rate	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.
The holding that unlocks it	There is no shareholding threshold, no second tier and no holding period. Art. 10(2): 'However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is A resident of the other contracting state, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.' The only condition is beneficial ownership by a resident of the other State. Because no MLI applies here, no 365-day holding requirement has been imported. The real condition on any dividend claim is article 28 (limitation of benefits), which applies to every benefit of the Agreement — a Mexican corporate shareholder that is not a 'qualified person' under Art. 28(2), or that fails the base-erosion proviso, gets no 10 per cent cap at all. The paragraph closes with the standard saving that it does not affect taxation of the company on the profits out of which the dividends are paid.
Where this comes from	Article 10, paragraph 2

Art. 10(3) is the ordinary dividend definition (income from shares or other rights, not being debt-claims, participating in profits, and income from other corporate rights taxed as shares). Art. 10(4) refers effectively-connected holdings to Art. 7 or Art. 14. Art. 10(5) bars extra-territorial taxation and taxation of undistributed profits. There is no branch-profits-tax permission of the Brazilian or Turkish kind.

Interest

Rate	10 per cent of the gross amount of the interest — Art. 11(2), a single flat ceiling, conditional on the beneficial owner of the interest being a resident of the other Contracting State. There is no lower tier for bank lending.
Exemptions	The exemptions sit in the article itself, at art. 11(3), not in the protocol. The chapeau: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that IT is derived and beneficially owned by:' — the double requirement, derived and beneficially owned. Limb (a) — and note that this treaty puts the central bank inside limb (a) rather than in a separate limb: 'the Government, a political sub-division or a local authority or central bank of the other Contracting State'. That placement matters because limb (c) cross-refers to sub-paragraph (a). Limb (b) — named institutions on both sides: '(i) in the case of India, the reserve bank of india, the export-import bank of india, the national housing bank; and (ii) in the case of Mexico, banco de mexico, banco nacional de comercio exterior, S.N.C., nacional financiera S.N.C., or banco nacional de obras Y servicios publicos, S.N.C.' Four Mexican development banks are named; the Indian list is the same three as in the Malta treaty. Note the Reserve Bank of India appears both here and, generically, as 'Central Bank' in limb (a). Limb (c) is A payer-side limb grafted onto A recipient-side chapeau and IT does not read coherently: '(c) the interest is paid by any of the entities mentioned in sub-paragraph (a); or'. The chapeau requires the interest to be 'derived and beneficially owned by' the person in the following limbs, but limb (c) is about who pays, not who receives. Read literally with the chapeau, limb (c) is unworkable. Read as an independent limb — which is the only reading that gives it content — it exempts interest paid by the Government, a political sub-division, a local authority or the Central Bank. But sub-paragraph (a) refers to those entities 'of the other contracting state', while interest 'arising in a Contracting State' will normally be paid by a resident of that State, so even that reading is awkward. This is A genuine drafting defect in the notified text and any reliance on limb (c) should be flagged to the client rather than asserted. See gaps. Limb (d) — an extension mechanism: 'any other institution as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters'. Not self-executing; the sources used here reproduce no such exchange. There is no carve-out for penalty charges for late payment. The usual closing sentence of the interest definition ('Penalty charges for late payment shall not be regarded as interest') is absent from Art. 11(4). On the contrary, the definition is extended by Protocol head IV — see below.
Where this comes from	Article 11, paragraph 2 and 3

Protocol head IV extends the interest definition in six directions and is the most commercially important thing in article 11: 'In respect of paragraph 4 of Article 11, it is clarified that the term interest includes the following items of income: (a) commissions related to money lent; (b) payments made as guarantee of money lent, as well as for the acceptance to act as A guarantor; (c) payment derived from factoring contracts; (d) income derived from the alienation of credits; (e) income derived from financial instruments where there is underlying debt; (f) income derived from the alienation at discount of securities representing debt.' Limbs (b), (c), (d) and (f) are the ones to note: guarantee fees are interest under this treaty, not fees for technical services and not other income; factoring income is interest; and gains on the alienation of credits or of discounted debt securities are interest rather than capital gains, which takes them out of Article 13 altogether. Art. 11(6) uses the narrow source rule — 'when the payer is A resident of that State' — and its PE deeming limb is also unusually loose: it omits the words 'in connection with which the indebtedness on which the interest is paid was incurred', requiring only that the interest be borne by the PE or fixed base.

Royalties

Rate	10 per cent of the gross amount — Art. 12(2). Royalties and fees for technical services share one article and one rate, with no split, no lower tier for equipment royalties or copyright and no separate FTS rate. Conditional on the beneficial owner being a resident of the other Contracting State.
Where this comes from	Article 12, paragraph 2

Art. 12(3)(a) is the standard wide definition — copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, patent, trade mark, design or model, plan, secret formula or process, use of or right to use industrial, commercial or scientific equipment, and information concerning industrial, commercial or scientific experience. Protocol head V then extends IT twice, and both extensions matter. First, transmission rights: royalties are 'deemed to include payments of any kind received as a consideration for (a) the reception of, or the right to receive, visual images or sounds, or both, for the purpose of transmission by (i) satellite; (ii) cable, optic fibre or similar technology; or (b) the use of, or the right to use, in connection with television or radio broadcasting, visual images or sounds, or both, for the purpose of transmission to the public by (i) satellite; or (ii) cable, optic fibre or similar technology.' Agreed bilaterally in 2007, five years before India inserted comparable words into s.9(1)(vi) by the Finance Act 2012, so for Mexico the transmission limb does not depend on the contested retrospective domestic amendment. Second, and easily missed: 'notwithstanding the provisions of article 13, the term royalties also includes payments derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof.' Contingent consideration on a sale of intellectual property — an earn-out geared to use or productivity — is a royalty taxable at 10 per cent gross under Article 12, and is expressly taken out of the capital gains article. Art. 12(5)(b) is a second-limb catch-all source rule of the Malta kind: where under (a) the royalties or FTS do not arise in either State, but the right or property is used, or the services are performed, in one of them, they are deemed to arise there.

Fees for technical services

Rate	10 per cent of the gross amount — the same rate as royalties, under the same Art. 12(2).
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 and 3(b)

There is an FTS limb and IT has no make-available requirement. Art. 12(3)(b): 'The term fees for technical services as used in this Article means payments of any kind, other than those mentioned in articles 14 and 15 of this agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.' This is word-for-word the Malta formulation. The words 'make available', 'enable', 'technical plan' and 'technical design' appear nowhere in the Agreement or the Protocol — verified by full-text search. Four points. First, no make-available filter: a Mexican service provider cannot argue that its services transmitted nothing to the Indian payer; the character of the service is the whole test. Second, managerial services are expressly included, so management fees, head-office charges and secondment arrangements are within the article. Third, the only carve-out is for payments 'mentioned in Articles 14 and 15' — independent and dependent personal services — with no negative list of the US/Portugal kind: nothing excluded for services ancillary to a sale of property, for construction or assembly, for natural-resources services, for teaching or for personal-use services. Fourth, the overlap with the 90-day service PE is the same as under the malta and kenya treaties: Art. 5(3)(b) creates a PE where services continue more than 90 days in any 12-month period for the same or connected project, so Indian-source service income is exposed on two fronts — 10 per cent gross under Art. 12, or net-basis PE taxation under Arts. 5 and 7 once the threshold is crossed, in which case Art. 12(4) refers the income to Art. 7 or Art. 14. And note the second-limb source rule at art. 12(5)(b): where the primary source rule does not place the fees in either State but 'the fees for technical services relate to services performed in one of the Contracting States', they are deemed to arise in that State — a catch-all that closes the gap where a non-resident payer with no PE pays for services performed in India. There is no MFN clause (see practitioner_notes), so no make-available limb can be imported from a later Indian treaty. But note, uniquely among the no-make-available treaties in this batch, that the full LOB in article 28 applies to the 10 per cent cap too: a Mexican service company that is not a qualified person, or that fails the base-erosion proviso, does not get the cap at all.

Capital gains on shares

Treatment	Full source-state taxing right over share gains. Article 13 has six paragraphs, splitting the shares limb in two. Art. 13(4): 'Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.' Art. 13(5): 'Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is A resident of A contracting state may be taxed in that state.' Paragraph 5 is an unrestricted source-State taxing right over ordinary share gains — no percentage test, no minimum holding, no listing carve-out, no de minimis. India may tax a Mexican resident's gain on shares of an Indian company whatever the company's asset mix. Art. 13(6) is the residual: gains from any property other than that in paras 1 to 5 are 'taxable only in the Contracting State of which the alienator is a resident' — so unlike Brazil, there is a residence-only category here. Art. 13(3) allocates ship and aircraft gains to the State of residence of the alienator, not the place of effective management. But note protocol head V(2), which removes A category from article 13 altogether: 'notwithstanding the provisions of Article 13, the term royalties also includes payments derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof.' Contingent consideration on an ip disposal is therefore taxed under Article 12 at 10 per cent gross rather than as a capital gain.
Grandfathering	None, and none is needed. The taxing right has been in the treaty since it took effect in FY 2011-12 and has never been amended — zero amendment markers, no amending notification, no MLI. There is no shares-acquired-before date, no transition rate and no limitation-of-benefits gateway attached to Article 13 specifically. But article 28 (limitation of benefits) applies generally to every benefit of the Agreement, including the residence-only treatment in Art. 13(6) — so a Mexican holding vehicle seeking to rely on Art. 13(6) for a non-share asset must still be a qualified person or come within Art. 28(3).
Conditions	Art. 13(5) is unconditional on its face. Art. 13(4) turns on the undefined word 'principally' — the treaty supplies no percentage, no valuation date and no 365-day look-back, because no MLI applies on the face of the record. The operative conditions on any Article 13 claim come from Article 28.
Where this comes from	Article 13, paragraph 4, 5 and 6

Permanent establishment

Construction or installation PE	More than six months — Art. 5(3)(a): 'A building site or construction, installation or assembly project or supervisory activities in connection therewith only if such site, project or activities last more than six months.' Installation, assembly and supervisory activity are inside the six-month test. And the protocol supplies an anti-splitting rule that the article does not: protocol head I — 'In respect of sub-paragraph (a) of paragraph 3 of Article 5, it is clarified that for the purposes of computing the time limits referred to in this paragraph, the activities carried on by an enterprise associated with another enterprise within the meaning of article 9 shall be aggregated with the period during which the activities are carried on by the associated enterprise, if the activities of both enterprises are identical or substantially similar for the same or connected project.' Read the qualifiers: association is tested by article 9 (participation in management, control or capital), not by a 50 per cent share test; the activities must be identical or substantially similar; and they must be for the same or connected project. There is no 30-day de minimis of the Brazilian kind. This is MLI Art. 14 achieved bilaterally in 2007. Note that protocol head I is confined to sub-paragraph (a) — it does not aggregate associated enterprises' activities for the 90-day services test in sub-paragraph (b).
Service PE	Yes — more than 90 days within any 12-month period. Art. 5(3)(b): 'The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than 90 days within any 12-month period.' Every element is load-bearing: the personnel must be engaged by the enterprise for that purpose; aggregation is limited to the same or connected project, so unconnected engagements are not added together; the window is any 12-month period, a rolling test rather than the fiscal year; and the threshold is more than 90 days, so exactly 90 does not create a PE. The phrase 'within the country' (rather than 'within a Contracting State') is a drafting slip but its meaning is plain. Ninety days is the same threshold as Malta and Kenya in this batch, and as under those treaties it sits alongside an FTS limb with no make-available test.
Agency PE	Yes — Art. 5(5), three limbs: (a) has and habitually exercises an authority to conclude contracts in the name of the enterprise, unless the person's activities are limited to those in para 4 which, if exercised through a fixed place of business, would not make it a PE; (b) has no such authority but habitually maintains a stock of goods from which he regularly delivers on behalf of the enterprise; or (c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself — confined to the enterprise itself, without the group extension found in the Hungarian and Turkish treaties. Art. 5(7) is the independent-agent exclusion with A two-limb, cumulative anti-exclusivity rider — the same formulation as the Kenya and Philippines treaties and materially more taxpayer-favourable than Malta's or the Czech Republic's: 'However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status'. Both limbs must be satisfied — exclusivity alone does not defeat independence; non-arm's-length dealing must also be shown. Art. 5(6) is a separate insurance PE (premiums collected or risks insured in the other State through a person other than an independent agent, except re-insurance).
Where this comes from	Article 5

Art. 5(2) has nine inclusive limbs, none with a duration test, including '(f) a sales outlet', '(g) A warehouse in relation to A person providing storage facilities for others' and '(h) A farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on'. Art. 5(4)(a) and (b) exclude only 'storage or display' — the word 'delivery' is absent, as in the Czech and Kenya treaties. A fixed place of business used for delivery is therefore not within the exclusions and can constitute a PE. Since no MLI applies there is no anti-fragmentation overlay and no 'closely related enterprise' concept, but the delivery omission achieves bilaterally much of what MLI Art. 13 Option A was designed to achieve. Protocol head VII is also worth knowing: 'It is understood that for mexican tax purposes, the fixed base will be treated in accordance with the principles that apply to permanent establishment.' Mexican domestic law does not use a separate fixed-base concept; the Protocol assimilates it to PE on the Mexican side only.

Anti-abuse: limitation of benefits, and the MLI

LOB	Yes — article 28, 'limitation of benefits', and IT is A full objective LOB of the american type, not the short indian form. This is the second-most developed anti-abuse article in this batch, behind only Brazil's Article 26-A. Structure. Para 1 — the gateway: a person other than an individual, resident in one State and deriving income from the other, is entitled to the benefits of the Agreement 'only if such a person has the qualifications as defined in paragraph 2 and meets the other conditions of this agreement'. Note that individuals are outside Article 28(1) altogether. Para 2 — the qualified-person list, tested for A fiscal year: (a) a government entity; (b) a company incorporated in either contracting state if either (i) its principal class of shares is listed on a recognised stock exchange as defined in para 5 and is regularly traded on one or more recognised stock exchanges — both listing and regular trading are required — or (ii) at least 50 per cent of the aggregate vote or value of its shares is owned directly or indirectly by individuals resident in either State, or by other persons incorporated in either State at least 50 per cent of whose shares or beneficial interest is so owned; (c) a partnership or association of persons at least 50 per cent of whose beneficial interests is so owned; (d) a charitable institution or other tax exempt entity whose main activities are carried on in either State. Note the ownership tests look only to individuals resident in the two states and to entities incorporated in them — a third-country individual shareholder does not count, however substantial the structure. Para 2 then carries A base-erosion proviso which applies to all four limbs and which is the provision most likely to defeat A claim: 'Provided that the persons mentioned above will not be entitled to the benefits of the agreement if more than 50 per cent of the person'S gross income for the taxable year is paid or payable directly or indirectly to persons who are not residents of either of the contracting states in the form of payments that are deductible for the purpose of computation of tax covered by this Agreement in the person's state of residence (but not including arm'S length payment in the ordinary course of business for services or tangible property and payments in respect of financial obligations to A bank incurred in connection with a transaction entered into with the permanent establishment of the bank situated in either of the Contracting States).' Read the carve-out in full: arm's-length payments in the ordinary course of business for services or tangible property are excluded from the 50 per cent computation — but payments for intangibles, and royalties in particular, are not excluded and count towards base erosion. Para 3 — the active-business / purpose escape, and note that it is not self-executing: a resident 'shall nevertheless be granted the benefits ... If the competent authority of the other contracting state determines that the said resident actively carries out business in the other State and that the establishment or acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under the Agreement.' Both conditions must be satisfied, and the determination is the competent authority's. Para 4 — A procedural protection that should always be invoked: 'before a resident of a Contracting State is denied relief from taxation in the other Contracting State by reason of paragraph 1, 2 or 3, the competent authorities of the contracting states shall consult each other.' Consultation is mandatory and is a precondition of denial. Para 5 — 'recognised stock exchange' means, in India, any stock exchange recognised by the Central Government under the Securities Contracts (Regulation) Act 1956; in Mexico, the bolsa mexicana de valores; and any other exchange the competent authorities agree to recognise.
PPT	No MLI principal purposes test — no Synthesised Text for Mexico has been identified from the sources used here. But there is A bilateral main-purpose test, and IT is drafted to override the whole of the objective LOB. Art. 28(6): 'notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this agreement, if its affairs were arranged in such A manner as if IT was the main purpose or one of the main purposes to avoid taxes to which this agreement applies.' Three features distinguish it from the MLI PPT. First, it applies to 'any person', including an individual — whereas Art. 28(1) is confined to persons other than individuals. Second, it has no object-and-purpose escape: the MLI PPT allows the benefit where granting it would accord with the object and purpose of the relevant provisions; Art. 28(6) contains no such proviso and is therefore harsher than the PPT. Third, the purpose tested is 'to avoid taxes to which this agreement applies' — a tax-avoidance purpose — rather than the PPT's 'obtaining that benefit'; the formulations are close but not identical. And note the interaction with para 4: para 4 requires consultation before denial 'by reason of paragraph 1, 2 or 3' — it does not mention paragraph 6. On a literal reading, denial under the main-purpose test in para 6 does not attract the mandatory consultation requirement. Which paragraphs of an existing anti-abuse article did A PPT replace? None — no MLI PPT has been introduced into this treaty on the face of the record, so all six paragraphs of Article 28 stand. That is the same position as Kenya: the bare bilateral tests survive intact precisely because nothing has replaced them.
Subject to tax	None as a general condition. But protocol head VI is A broad and forward-looking domestic-law saving aimed at three specific regimes: 'It is clarified that the provisions of this Agreement shall not prevent A contracting state from applying its provisions of domestic law regarding thin capitalization, controlled foreign corporation (in the case of mexico, preferential tax regimes) and back to back loans, whether existing on the date of entry of force of this agreement or enacted subsequently.' The closing words are the sting: the saving expressly extends to domestic rules enacted after entry into force, so India's s.94B thin-capitalisation rule (introduced by the Finance Act 2017, well after 1-2-2010) is preserved against both the non-discrimination article and any treaty-override argument, as is any future Indian cfc regime. The express mention of back-to-back loans is unusual and is directed at conduit financing.
Where this comes from	Article 28 (six paragraphs — objective LOB in 1-5, main-purpose override in 6); Protocol head VI for the thin-cap/CFC/back-to-back saving

No synthesised text for mexico has been identified from the sources used here. There is therefore only one text of this treaty in the sources used here and nothing to reconcile. None of the MLI overlay appears on the face of the record: no anti-treaty-shopping preamble, no MLI principal purposes test, no saving clause, no anti-fragmentation rule on Art. 5(4), no commissionnaire rule, no 365-day look-back on immovable-property share gains, no splitting-up-of-contracts rule beyond the bilateral one in the Protocol. This one deserves A caveat that the others do not. Mexico signed the MLI on 7 June 2017 and is a very active MLI jurisdiction, so the absence of a synthesised text here is more likely to reflect what is available here than the underlying position. I record only what the sources used here establish — that no synthesised text is available — and flag the point in gaps rather than concluding that the MLI cannot apply. What mitigates the gap: unlike the Philippines, Turkey and Egypt treaties, this treaty is not defenceless without the MLI. It has a full objective limitation of benefits article at Article 28, including a main-purpose test at Art. 28(6), so a PPT-equivalent already exists bilaterally.

The protocols, in order

A treaty read without its protocols is a wrong answer.

None. The citation line names one notification and one date — 'notification : No. 86/2010 [F. No. 503/4/91-ftd-I], dated 26-11-2010.' — with no 'as amended by', no 'as corrected by' and no trailing footnote asterisk. There is no amendment marker anywhere in the notified text, across all 31 Articles and the Protocol. The treaty stands exactly as notified in 2010.
The protocol was agreed 'At the signing of the Agreement', states that its provisions 'shall be an integral part of the Agreement', and was notified with it. It was opened and read separately, as required. It has seven numbered heads (I to VII) and at least four of them change answers that the Articles alone would give — see practitioner_notes.
No synthesised text exists, so no MLI change to this treaty is established here. See synthesised_text.

The words themselves

Quoted from the treaty as notified.

Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies.

Article 28, paragraph 6 of the treaty as notified.

Provided that the persons mentioned above will not be entitled to the benefits of the Agreement if more than 50 per cent of the person's gross income for the taxable year is paid or payable directly or indirectly to persons who are not residents of either of the Contracting States in the form of payments that are deductible for the purpose of computation of tax covered by this Agreement in the person's state of residence (but not including arm's length payment in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank incurred in connection with a transaction entered into with the permanent establishment of the bank situated in either of the Contracting States).

Article 28, paragraph 2, proviso of the treaty as notified.

Before a resident of a Contracting State is denied relief from taxation in the other Contracting State by reason of paragraph 1, 2 or 3, the competent authorities of the Contracting States shall consult each other.

Article 28, paragraph 4 of the treaty as notified.

In respect of sub-paragraph (a) of paragraph 3 of Article 5, it is clarified that for the purposes of computing the time limits referred to in this paragraph, the activities carried on by an enterprise associated with another enterprise within the meaning of Article 9 shall be aggregated with the period during which the activities are carried on by the associated enterprise, if the activities of both enterprises are identical or substantially similar for the same or connected project.

Article Protocol, paragraph I (Ad. Article 5) of the treaty as notified.

In respect of paragraph 4 of Article 11, it is clarified that the term "interest" includes the following items of income : (a) Commissions related to money lent; (b) Payments made as guarantee of money lent, as well as for the acceptance to act as a guarantor; (c) Payment derived from factoring contracts; (d) Income derived from the alienation of credits; (e) Income derived from financial instruments where there is underlying debt; (f) Income derived from the alienation at discount of securities representing debt.

Article Protocol, paragraph IV (Ad. Article 11) of the treaty as notified.

In respect of sub-paragraph (a) of paragraph 3 of Article 12, notwithstanding the provisions of Article 13, the term "royalties" also includes payments derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof.

Article Protocol, paragraph V(2) (Ad. Article 12) of the treaty as notified.

It is clarified that the provisions of this Agreement shall not prevent a Contracting State from applying its provisions of domestic law-regarding thin capitalization, controlled foreign corporation (in the case of Mexico, preferential tax regimes) and back to back loans, whether existing on the date of entry of force of this Agreement or enacted subsequently.

Article Protocol, paragraph VI of the treaty as notified.

Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State.

Article 13, paragraph 5 of the treaty as notified.

What to watch

No most-favoured-nation clause. A full-text search of the whole record returned no hit for 'most favoured', 'most-favoured', 'third State' or 'OECD' anywhere in the Agreement or the seven-head Protocol. There is no MFN on dividends, interest, royalties, FTS or capital gains; nothing is tied to a later Indian treaty; nothing covers scope; and no notification has ever been or could be issued under such a clause. The make-available argument therefore has no textual foundation under the Mexico treaty — the same position as Malta, the Czech Republic and Kenya, and unlike Hungary.
All three rates are 10 per cent — dividends, interest, and royalties and FTS together. That uniformity makes Mexico one of the more attractive rate profiles in the batch. What is not uniform is entitlement: unlike every other 10-per-cent treaty in this batch, every one of those caps is gated by A full objective limitation-of-benefits article. A Mexican company that is not listed and regularly traded, and that is not at least 50 per cent owned by individuals resident in India or Mexico, is not a qualified person; and even a qualified person loses everything if more than half its gross income is paid out to third-country residents in deductible form other than arm's-length payments for services or tangible property. Royalty and interest outflows from the Mexican entity count towards that 50 per cent. The LOB, not the rate, is where mexico cases are won and lost.
The protocol is where four of the answers actually live, and none of them is visible from the articles. Head I aggregates an associated enterprise'S identical or substantially similar activities on the same or connected project for the six-month construction test. Head IV makes guarantee fees, factoring income, gains on alienation of credits and gains on discounted debt securities into interest — which both brings them within the 10 per cent cap and takes the gains out of Article 13. Head V makes satellite and cable transmission payments royalties, and makes contingent consideration on an ip disposal a royalty notwithstanding Article 13. Head VI preserves thin-capitalisation, cfc and back-to-back-loan rules 'whether existing ... Or enacted subsequently'. A Mexico opinion given without reading the Protocol will be wrong on financing income, on media and broadcast payments, on ip earn-outs and on s.94B.
Protocol head II is A force-of-attraction rule with A purpose-based escape — an unusual and taxpayer-friendly combination. Where an enterprise sells goods in the other State through a PE and also sells the same or similar kind of goods there directly, 'these goods or merchandise shall be considered as sold through that permanent establishment. However, the profits derived from such sales shall not be taxable in the other contracting state if the enterprise demonstrates that such sales have been carried out for reasons other than obtaining A benefit under this agreement.' Compare Turkey's Protocol paragraph 3 and Hungary's, which have no such escape: there, force of attraction is absolute. Here the burden is on the enterprise, but the escape exists.
Article 22 (other income) is A pure source-taxation article and IT is one sentence long: 'Items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other contracting state may be taxed in that other state.' There is no residence-only rule, no PE carve-out and no exception — the same shape as the Brazil treaty. Anything outside the distributive rules remains fully taxable at source.
Protocol head III deals with A shipping enterprise whose place of effective management is aboard A ship: it is deemed situated in the State of the ship's home harbour, or, if there is none, in the State of which the operator is a resident.
Overall shape. Uniform 10 per cent rates; a 90-day service PE; an FTS limb with no make-available filter; unrestricted source taxation of share gains; a source-taxing Other Income article; a PE exclusion list that omits 'delivery'; and a full objective LOB with a base-erosion proviso and an overriding main-purpose test. Offsetting those: an independent-agent test that survives exclusivity unless non-arm's-length dealing is also shown; a force-of-attraction rule with a purpose-based escape; and a mandatory competent-authority consultation before any denial under Art. 28(1), (2) or (3).

What this page does not tell you. Mexico'S MLI position is not established from the sources used here, and this is the most significant gap in this record. Mexico signed the MLI on 7 June 2017 and is an active MLI jurisdiction, yet no synthesised text has been identified from the sources used here. The conclusion that no MLI overlay applies rests solely on that absence, which may reflect the coverage of the sources used here rather than the underlying legal position. If india and mexico have both listed this agreement as A covered tax agreement and mexico has deposited its instrument of ratification, an MLI PPT would apply in addition to article 28, and the anti-fragmentation, commissionnaire and 365-day rules would overlay articles 5 and 13. The OECD Depositary listing must be checked before relying on this record's 'no PPT' conclusion. Note that the practical consequence is smaller than it would be elsewhere, because Art. 28(6) already contains a main-purpose test that is harsher than the PPT in having no object-and-purpose escape. The Gazette S.O./G.S.R. Number for Notification No. 86/2010 of 26-11-2010 is not given — only the notification number and the file number. Art. 11(3)(c) is defectively drafted and cannot be applied with confidence. The chapeau to Art. 11(3) requires the interest to be 'derived and beneficially owned by' the persons listed, but limb (c) reads 'the interest is paid by any of the entities mentioned in sub-paragraph (a)' — a payer test inside a recipient-side list, and cross-referring to entities 'of the other Contracting State' when interest arising in a State is normally paid by a resident of that State. The Gazette copy would show whether the defect is in the notified text or in the copy read here, but would probably not resolve the meaning. Art. 11(4) omits the usual sentence excluding penalty charges for late payment from the definition of interest. Whether that omission is deliberate cannot be established from the sources used here. Art. 11(3)(d) contemplates further exempt institutions agreed 'from time to time ... Through exchange of letters'. Whether any such letters have been exchanged since 2010, and which institutions they name, is not established from the sources used here. The same applies to Art. 28(5)(c), which allows the competent authorities to recognise further stock exchanges for the LOB listing test. Art. 13(4) uses 'principally' without definition — no percentage, no valuation date, no look-back period, and no MLI applies on the face of the record to supply them. Art. 28(3) makes the active-business escape depend on a determination by 'the competent authority of the other contracting state' — i.e. The State in which the benefit is claimed. No procedure, time limit or appeal route is specified, and no competent-authority agreement under Art. 28 or Art. 25(4) is reproduced here. Art. 28(4) requires consultation before denial 'by reason of paragraph 1, 2 or 3' and omits paragraph 6. Whether denial under the main-purpose test in para 6 escapes the consultation requirement is unresolved on the face of the text.

The India–Mexico tax treaty